Context: Require panel to review allocation of legislative powers between Centre & states in Schedule VII of Constitution, said 15th Finance Commission Chairman NK Singh.

Key Points

• Finance Commission chairman called for rationalisation of centrally sponsored schemes and the constitution of a panel to re-examine classification of legislative subjectsbetween the Centre and states.
• He said that a fiscal deficit range must bebased on expenditure outcomes, rather than a point target.
• Total public outlays on centrally sponsored schemes were close to Rs 6-7 lakh crore per annum and that the central government spends over Rs 3.5 lakh crore, or around 1.2 per cent of GDP, on these schemes.
• There is a need to take into account changes in technology, global interdependence and changes in national priorities when recommending the classification of subjects to the union, state or concurrent lists.

7th schedule of Constitution of India
The Seventh Schedule to the Constitution of India defines and specifies allocation of powers and functions between Union & States.
It contains three lists:
1) Union List

• The Union List is a list of 100 (Originally 97) numbered items as provided in the Seventh Schedule to the Constitution of India. The Union Government or the Parliament of India has exclusive power to legislate on matters relating to these items. Few important items are: Defence of India; Naval, military and air forces; any other armed forces of the Union; Delimitation of cantonment areas, local self-government

2) State List

• The State List is a list of 61 (Originally 66) items in the Schedule Seven to the Constitution of India.  The respective state governments have exclusive power to legislate on matters relating to these items. Few important items are: Public order but not including the use of any naval, military or air force or any other armed force of the union; Police; Officers and servants of the High Court; Prisons, reformatories, Borstal institutions; Local government

3) Concurrent List

• There are 52 (Originally 47) items currently in the list: This includes items which are under joint domain of the Union as well as the respective States. However, given that there can be conflict when it comes to laws passed by Parliament and state legislatures on the same subject, the Constitution provides for a central law to override a state law. Few of them are Criminal procedure; Removal from one State to another State of prisoners; Marriage and divorce; Transfer of property other than agricultural land; Bankruptcy and insolvency; Trust and Trustees.

Article 282:

• It says that Central government or the states may make any grant for any scheme or project in public interest.